Top-grade credit ratings drop to over 10-year low

SummaryA total of 50 corporate debt securities got the top investment grade credit ratings in the first four months of the current fiscal -- the lowest number of such high ratings for this period in over ten years.

A total of 50 corporate debt securities got the top investment grade credit ratings in the first four months of the current fiscal -- the lowest number of such high ratings for this period in over ten years.

The number of debt issues that got non-investment grade ratings between April-July period of current fiscal 2013-14 also declined to 377, from as many as 1,249 in the same period of the previous financial year, according to data compiled by Sebi, which regulates credit rating agencies (CRAs) in India.

Various CRAs assigned a total of 720 long term corporate debt securities between April-July this fiscal, including 'highest safety investment grade (AAA)' rating for 50 of them.

The 50 AAA-rated issues together involved debt securities worth about Rs 4.52 lakh crore, as against a total amount of about Rs 6,084 crore for 377 issues that were assigned 'non-investment grade' ratings.

AAA rating is assigned to highest-quality bonds that face the lowest risk of default, while 'non-investment grade' applies to the low-quality issues.

An AAA rating is followed by 'High Safety (AA)', Adequate Safety (A)' and 'Moderate Safety (BBB)'.

Meanwhile, 38 rating downgrades worth Rs 11,623 crore were accepted by the respective companies in the first four months of current fiscal, while 69 upgraded issues amounting to Rs 11,844 crore were approved.

As per the process followed by credit rating agencies, the assigned rating is communicated to the issuer for acceptance. In the case where the issuer does not find the rating acceptable, it can appeal for a review.

The rating agencies registered in the country include CRISIL, India Ratings and Research (formerly Fitch Ratings India), ICRA, Credit Analysis & Research (CARE), Brickwork Ratings India and SME Rating Agency of India.